CMS reported total public spending for home health services rose 14.4%
in 2008, the seventh consecutive year of annual growth between 14% and 19%.

The U.S. Department of Labor recently projected the home health services industry to experience the fastest growth of any industry in the U.S. through 2014.

As national healthcare spending continues to outpace the rate of inflation, and the population of older Americans continues to grow, alternatives to costly hospital stays will increase in demand. Increasing life expectancies, coupled with rapidly rising costs for both hospital stays and prescription drugs, will cause paradigm shifts in healthcare expenditures.

Research confirms that patients have a strong preference to be cared for in the home, which is also the lowest cost to the system.

The implementation of the Medicare PPS for homecare in 2001 has significantly changed the industry. Medicare has also created quantitative and qualitative measurement tools to eventually reward the higher quality providers. 

There are consistent reports of both managed care and Medicare's consideration of an eventual “payment per hospitalization” for physicians. This would ultimately align physician incentives with hospital incentives in further reducing length of stays, which could increase the growth rates for homecare.

Medicare’s 75% Rule is designed to transition simple rehab care out of inpatient facilities and into the home.

A Rand Corporation study cited an episode of homecare therapy for knee and hip replacement yielding positive outcomes for $3,500 less than in a skilled facility and $8,500 less than in an inpatient rehabilitation facility.

Medicare now rates homecare agencies on twelve performance categories, and it appears that these categories will be expanded in the future. The Institute of Medicine is currently working with CMS to potentially broaden the scope of criteria to include additional metrics such as the patient’s opinion of the home health experience.